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Hanesbrands Q3 Earnings: Buying Soaring NYSE:HBI Stock Before Call?

in EARNINGS/INVESTING IDEAS by

Hanesbrands Inc. (NYSE:HBI) is scheduled to report Q3 earnings results on November 5, 2020.

The company is expected to report earnings of $0.38/share on revenue of $1.648 billion. The consensus earnings per share (EPS) of $0.38/share is based on a poll of 13 analysts and represents a decline in eps of −29.5% over the same quarter last year, when the company reported earnings of $0.54/share.

The revenue forecast of $1.648 billion based on a poll of 11 analysts implies a year-over-year (YoY) decline in revenue of −11.8%. Last year the company reported $1.867 billion in revenue for the quarter.

Expected to report EPS contraction of −29.5% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $1,647.52 $1,866.97 −11.8%
EPS $0.38 $0.54 −29.5%

Earnings Call Trends

Historically, management has exceeded analyst expectations 4 out of the last 8 tracked quarters, missed 1 quarter, and met expectations 3 quarters.

What are your expectations from Hanesbrands Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $0.06 $0.60 948.6% Beat
Q1, 2020 $0.12 $0.05 −57.6% Missed
Q4, 2019 $0.51 $0.51 0% Met
Q3, 2019 $0.54 $0.54 0% Met
Q2, 2019 $0.44 $0.45 1.3% Beat
Q1, 2019 $0.25 $0.27 6.3% Beat
Q4, 2018 $0.46 $0.48 3.3% Beat
Q3, 2018 $0.55 $0.55 0% Met

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 27, 2020, the stock price reacted by falling −3.5%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
July 30, 2020 $14.64 $14.13 −3.5% Decline
April 30, 2020 $10.39 $9.58 −7.8% Decline
February 7, 2020 $14.42 $14.20 −1.5% Decline
October 31, 2019 $16.03 $15.48 −3.4% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.49, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.49 implies a 0.6% chance of earnings manipulation.

Fundamentals And Technical Analysis

Hanesbrands Inc. is currently trading at $16.63/share, down −5.0% for the day. The company is trading at approximately 93.3% of its 52-week high of $17.73/share. The company’s stock price is up 17.7% since the last earnings report and down −3.7% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 61.62 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:HBI Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 10.99 and a forward P/E multiple of 12.01.

Hanesbrands Inc.’s current share price also implies a price-to-book (P/B) multiple of 5.33. The following table summarizes some other key fundamental ratios:

Data as of October 28, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 27, 2020
Stock Price (Current) $16.63
P/E Ratio 11.0x
P/E Ratio (Fwd) 12.0x
PEG Ratio −3.4
Total Debt / Total Capital 43.2%
Levered Free Cash Flow $753.7 million
EV / EBITDA 9.5x

Finbox

Hanesbrands Inc. is a mid-cap stock with a market capitalization of $6.093 billion and a total enterprise value of $10.04 billion. The company operates in the Consumer Discretionary sector and the Textiles, Apparel & Luxury Goods industry.

Hanesbrands Inc., a consumer goods company, designs, manufactures, sources, and sells a range of basic apparel for men, women, and children in the United States. The company operates through three segments: Innerwear, Activewear, and International. It sells men’s underwear, women’s panties, children’s underwear, activewear, socks, and hosiery, as well as intimate apparel, such as bras and shapewears; home goods; and T-shirts, fleece, sport shirts, performance T-shirts and shorts, sports bras, and thermals, as well as licensed logo apparel in collegiate bookstores, mass retailers, and other channels. The company licenses its Champion name for footwear and sports accessories. Hanesbrands Inc. provides its products primarily under the Hanes, Champion, Maidenform, Bali, JMS/Just My Size, Polo Ralph Lauren, Playtex, DKNY, Donna Karan, Alternative, Gear for Sports, Hanes Beefy-T, Bonds, DIM, Sheridan, Bras N Things, Nur Die/Nur Der, Lovable, Wonderbra, Berlei, Abanderado, Shock Absorber, Zorba, Explorer, Sol y Oro, and Bellinda brand names. The company markets its products through retailers, wholesalers, and third party embellishers, as well as directly to consumers through Internet. As of December 29, 2018, it operated 243 retail and direct outlet stores in the United States and the Commonwealth of Puerto Rico, as well as 690 retail and outlet stores internationally. The company also sells its products in Europe, Australia, Asia, Latin America, Canada, the Middle East, Africa, Mexico, and Brazil. Hanesbrands Inc. was founded in 1901 and is headquartered in Winston-Salem, North Carolina.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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